Aequitas Adds BCE, Omers as Investors in Potential Exchange

Aug. 14 (Bloomberg) -- Aequitas Innovations Inc. said BCE
Inc. and the Ontario Municipal Employees Retirement System have
joined a group including Royal Bank of Canada and Barclays Plc
as investors developing an alternate exchange in Canada.

Joanne Kearney, a spokeswoman with Aequitas, said BCE,
Canada’s largest telecommunications provider, and Omers Capital
Markets, which manages the public investments of government
employees in Ontario, are founding investors in Aequitas and
each assumed a seat on the board of directors as of yesterday.

Aequitas brought in fund managers as investors as it plans
to compete for buy and sell orders in a Canadian market
dominated by TMX Group Ltd., which owns the Toronto Stock
Exchange, TSX Venture Exchange, Alpha and TMX Select trading
platforms. TMX’s exchanges had about 82 percent of equity
trading by volume as of June, according to data from the
Investment Industry Regulatory Organization of Canada.

“To our knowledge, we will be the only exchange globally
that has an ownership weighted towards the buy side,” Kearney
said in an e-mail.

The investors, which also include CI Financial Corp., IGM
Financial Inc., ITG Canada Corp. and PSP Public Markets Inc.,
each own no more than 15 percent of Aequitas, Kearney said. She
declined to disclose individual stakes.

The Ontario Securities Commission yesterday submitted a
request for comment regarding the proposal from Aequitas, ahead
of a formal application for recognition as an exchange.

‘Hybrid’ Market

The company is proposing a “hybrid” market that will
combine elements of traditional public stock exchanges with so-called dark pools, where some data on trades is not revealed in
order to protect the interests of buyers and sellers. Aequitas
said the exchange will be designed to “restrict predatory
trading.” The hybrid market is the first of its kind and
Aequitas has filed a patent for its design, Kearney said.

“We see untapped opportunity to use innovative technology
and marketplace design in a way that promotes liquidity,
fairness, cost savings and economic growth,” Aequitas said in a
statement disclosing the BCE and Omers investments.

Aequitas plans to submit its application to the provincial
regulator in late fall 2013 and expects to receive a recognition
order next spring. The company’s exchange will be operational by
late 2014.

Jos Schmitt, chief executive officer of Aequitas, was not
available for comment, Kearney said. Carolyn Quick, spokeswoman
with TMX Group, would not comment about the planned exchange.

“BCE has made a small private equity investment in
Aequitas as a commercial partner providing communications
solutions to our venture,” Jason Laszlo, a spokesman with BCE,
said in an e-mail.

Omers, the country’s sixth-largest fund manager by assets,
declined to disclose the size of its stake.

“Omers believes that Aequitas can create additional choice
for trading in Canada -- bringing the buyers and sellers of
securities together efficiently and cost-effectively,” Brent
Robertson, director of trading at Omers Capital Markets, said in
an e-mail statement.